NEW YORK (AP) — The largest American coal miner, Peabody Energy, is delaying an interest payment due this week and warned that it may have to file for Chapter 11 bankruptcy protection.
Shares of Peabody Energy Corp. plummeted more than 40 percent Wednesday morning. Its shares have already lost half their value in the last three months and 97 percent over the past year.
A slowing global economy and toughening environmental standards have slammed the coal industry, which is already beset by bankruptcies, shuttered mines and layoffs.
Peabody makes most of its money by selling its coal to utility companies that use it to generate electricity. But many utilities have shifted to using natural gas, which costs less than coal and produces less pollution. In fact, electricity generation from coal fell 13 percent last year compared to the previous year, according to the U.S. Energy Information Administration. U.S. coal production also fell to its lowest level in nearly three decades last year, the EIA said.
Within the last year, coal companies Alpha Natural Resources, Arch Coal and Patriot Coal have all filed for bankruptcy protection.
St. Louis-based Peabody said Wednesday that it didn't pay more than $70 million in interest payments that were due Tuesday. If the company doesn't make the payment in 30 days, it would default and it said there's "substantial doubt" it would be able to go on. The company made the announcement in a filing with the U.S. Securities and Exchange Commission.
Peabody said it has talked with its debt holders on ways to improve its finances, but if that doesn't work it may need to file for Chapter 11 bankruptcy.
Filing for Chapter 11 bankruptcy protection allows companies to reorganize their debt while they keep their businesses operating. When Arch Coal filed for bankruptcy protection in January, for example, it said its mines would remain open and its employees would not be affected.
Peabody had about 7,600 employees at the end of last year and has ownership stakes in 26 mines in the U.S. and Australia. Its U.S. mines are in Arizona, Colorado, Illinois, Indiana, New Mexico and Wyoming.
Shares of Peabody fell $1.73, or 43 percent, to $2.28 in morning trading Wednesday.